BANGLADESH: Textiles and power sectors see risks

DHAKA: Ongoing labour unrest in the textile sector can badly affect Bangladesh's aim of achieving record seven percent growth in the next fiscal year; analysts say.

Bangladesh must also improve its dire power supply situation which is restraining growth.

Finance Minister Saifur Rahman in his budget speech targeted a record seven percent growth for the fiscal year up from 6.71 percent forecast for this year.

Analysts say seven percent growth is achievable provided the government tackles the labour unrest in the textile sector, which accounts for three-quarters of the country's 9.3-billion-dollar export earnings.

Since May 20 Bangladesh has been reeling from protests by tens of thousands of textile workers demanding higher wages and better job benefits.

The workers have torched at least 16 factories, ransacked another 300 and forced the temporary closure of a key export processing zone, home to at least 84 factories mostly owned by foreign investors.

The factories, which account for 40 percent of total industrial employment, are notorious for their low pay and shabby safety standards.

Last year the economy grew at an impressive rate on the back of huge expansion of manufacturing sector, the main driver of which was textile; Rahman added.

Bangladesh's textile exports grew by nearly 20 percent in the first nine months of this fiscal year with business booming since the end of global textile quotas.

Sayeed said the government must also improve the power situation as much of the growth in industry and agriculture now depends on it.

"The whole economy is suffering from a big power generation shortfall," said economist Atiur Rahman of the independent think tank Development Coordination. "We need to spend much more developing this sectorand less in such areas as road transport.

As demand from farms and cities rises the country faces an average shortfall of 700-800 megawatts of power every day. This has risen to 1,800 megawatts, or nearly half the current production capacity, the director general of the country's power policy office, B.D. Rahmatullah, said.

This is a war-like situation. The supply scenario is so grim that we have to manage the load as it is done during wartime; he said.

Only 25 percent of the country's 140 million population has access to electricity. Many rural areas have power for only four hours a day, if at all, and Dhaka there are five to six hours of power cuts daily.

The power problem is holding back our economic growth; economist Abu Ahmed said.

The private sector is ready to invest billions in the sector provided the government carries out necessary reforms such as allowing independent power producers to set up plants and reducing red tape in the sector, said Ahmed.

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Added: June 12, 2006 Source: Agencies
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